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The end of cheap rice

Written by Steve Wiggins, Kevin Watkins

​Cheap rice may well be a thing of the past according to a new report from the Overseas Development Institute. In a report released today the institute reveals that increasing wages amongst Asian agricultural workers have helped drive higher prices, and may yet have a game-changing effect on global poverty rates.

Early 2013 saw prices top $550 a tonne, double the level in 2000, singling out rice as the only cereal not to see prices fall back to pre-2008 spike levels.  The sustained higher prices are the consequence of a ‘triple squeeze’ on the cost of producing rice: increased stockholding by Asian rice producers such as Thailand and Vietnam, high fuel and fertiliser costs and increased wages amongst agricultural workers in Asia.

Until recently rising populations across Asia have meant that there has been a reserve army of labour in rural areas willing to work for low wages. Urbanisation and industrial growth, however, are beginning to provide alternatives to low-paid farm work. Rural wages for Indian farm labourers have risen by around a third in the last five years.

High prices are a cause for concern in parts of Africa, particularly in coastal West Africa where urban consumers have grown accustomed to relatively low-cost rice imports from Asia and now face a threat to their food security.

ODI Director Kevin Watkins said:

“This report should cause people to sit up and take note. The drift towards higher prices for one of the world’s basic food staples has far-reaching implications. Millions of agricultural labourers stand to gain from higher wages, with potentially huge benefits for poverty reduction. But many poor households will also face higher food bills – and countries in Africa will face higher food import costs.”

Report author and ODI Research Fellow Steve Wiggins said:

“This is a story of winners and losers. It is good news in the long run as a step towards the end of global poverty, but it might not be such good news in the short run those who rely on rice for a large part of their daily diet.”